My Tweet of the Day
Positions: None.
Boockvar on Muted Nvidia Response, Data Center Spend, Retail Comments
From Peter Boockvar:
Data center spending continues on/Retail comments/Global PMIs roll out
I’ll dive right into some earnings calls and relevant comments.
Starting with Nvidia, another great quarter and guidance increase but another muted stock reaction to earnings. I’m guessing investors are seeing only downside in coming years to its gross margins of 75%, which were in line with expectations, due to increasing competition. That said, the stock obviously rallied right into the print so could have already priced in the numbers.
Amazingly off such a big base, “Total revenue of $82 billion was up 85% y/o/y and 20% sequentially.”
“We capitalized on the inflection and inference demand by ramping Blackwell systems across our diverse end customer base, from hyperscalers to model makers to AI cloud providers and sovereign customers.”
“Demand for AI infrastructure continues to expand at an unprecedented pace. The build out of AI factories is accelerating.”
And you don’t have to only sell semiconductors or servers to benefit from the data center construction. Eagle Materials makes cement, wallboard, and aggregates and said this yesterday on their call:
After mentioning the “current choppy business environment”, “In the cement sector, infrastructure and cement intensive non-residential construction applications are tightening several of our regional markets. Given the federal infrastructure spending still ahead for IIJA, the strength of state level infrastructure budgets and the data center projects positively affecting our entire footprint, the volume outlook for our Heavy Materials businesses remain favorable across our entire footprint.”
Walmart beat top line, met bottom line for Q1 but is lowering guidance for Q2 in part due to lower fuel margins. Not much color in the earnings release ahead of the call but the CFO spoke to Bloomberg News and said this:
“The headline consumer is still reasonably healthy. The high income consumer is spending with confidence in many categories, whereas the low-income consumer, we can tell, is more budget conscious, trying to navigate certain financial distress.”
From Target, down 4% yesterday:
With the comp rise of 5.6% “We’re encouraged that this top line growth was broad based, with growth across both stores and digital channels led by traffic, net sales increases in all six of our core merchandise categories, broad based strength across guest demographics and cohorts, and momentum around both key seasonal events and everyday moments. Despite this early progress, we know our work is just beginning as we were lapping softer results in Q1 of 2025.”
This was the other caveat, “Furthermore, we believe this year’s higher tax refunds were a source of upside to consumer spending in Q1, and that benefit will be fading over the rest of the year. While consumers have proven to be resilient so far, sentiment has been declining recently, and we’re keeping a close eye on their spending behavior.”
“Looking ahead, we will continue to focus on providing full year guidance, but…we’ll be facing more challenging prior year comparisons in Q2. In addition, we continue to expect more challenging cost headwinds in the first half of the year that are expected to moderate in the second half.”
From TJX and whose stock continues to shine in a tough space because of its value proposition to customers, rising almost 6% yesterday:
Overall comps were up 6% and “I am particularly pleased that each of our divisions delivered strong comp sales growth and drove increases in customer transactions. With our above planned first quarter sales, we are raising our full year sales and profitability outlook.”
“I am confident that our values and merchandise assortment resonated with consumers across all of our retail banners and that each of our divisions grew their customer base.”
“we saw very strong comp sales increases in both apparel and home categories.”
The key to their success, “we continue to just see that we are pricing our goods at fantastic value against what the full price out-the-door retail is.” And, “transactions have remained healthy and…we’re consistent across all of our divisions…in terms of transactions.”
But, “I want to mention that we did not flow the entire first quarter pre-tax profit and EPS beat to the full year, as we are now planning current fuel prices to remain in place for the rest of the year. Of course, if fuel prices come down from their current levels, we would expect to see favorability to our full year profitability plan.”
From Elf Beauty and whose stock is popping 10% this morning as numbers beat estimates:
But, “Our spring 2026 innovation is off to a slower start than we expected, and as a result, we’re not seeing the lift across our core items at spring innovation as historically delivered…As we look at the state of the consumer today, we have recently seen a more pronounced decline in units.”
In response, they are cutting some prices, also enabled by a lower tariff hit.
“As we consider the conflict in the Middle East, we are starting to see some inflationary pressure on commodities and transportation costs, like many other companies have spoken about. Assuming that oil prices remain around $100 per barrel on average, we estimate, we could face $15 million to $20 million of incremental cost headwinds in fiscal ‘27.”
Global PMI’s are beginning to roll out for May. Australia’s fell back below 50 at 47.8 from 50.4 with services the main reason, down 3 pts m/o/m to 47.7. Manufacturing stayed above 50 at 50.2 but down from 51.3. Aussie bond yields did fall by about 10 bps after an unexpected decline in employment in April and an uptick of 2 tenths to 4.5% in their unemployment rate.
Japan’s composite index dropped 1.1 pts m/o/m to 51.1 with services down 1 pt to exactly 50 while manufacturing held up at 54.5 vs 55.1 in the month before. Something I keep pointing out and what helped the April manufacturing figure too, “The sustained rise in manufacturing production (and sales) was partly supported by stockpiling efforts, as the war in the Middle East continued to impact product availability and drive up prices.”
And more on prices, “prices data painted an increasingly concerning picture for Japanese businesses. Overall, costs rose at the sharpest pace in 3 ½ years, while selling price inflation quickened to a fresh survey high.”
India’s PMI held steady at 58.1 with services at 58.9 and manufacturing at 54.3. This is in the face of higher energy prices and supply needs that they mostly import.
In the Eurozone, the May composite index fell to 47.5 from 48.8 with services the main pain point at 46.4, down 1.2 pts m/o/m. Manufacturing was 51.4 vs 52.2 and again helped by the pull forward of orders. S&P Global said “The service sector is being hit especially hard by the surge in the cost of living created by the war, notably via the demand sapping impact of higher energy prices. While there has been some support to manufacturing from precautionary stock building, this boost is starting to fade, with demand for both goods and services now in decline.”
And this too, “Job losses are also starting to become worryingly widespread as business confidence in any swift turnaround in the adverse economic climate fades further.”
With inflation, input costs rose at the fastest rate in 3 ½ years while output charges were at a 38 month high.
The May UK PMI dropped back below 50 at 48.5 from 52.6 all driven by the decline in services to 47.9 from 52.7. Manufacturing held at 53.7. Again with manufacturing, “manufacturers noted a temporary uptick in demand amid customer front loading to beat price hikes and potential supply disruptions.”
With services, “Anecdotal evidence cited greater economic hesitancy and weaker investment sentiment among clients, alongside delayed consumer spending decisions in response to the Middle East war (especially for international travel). A number of firms also cited domestic political uncertainty as a factor weighing on confidence among clients.”
My Largest Pot Holding
I am making ($VRNO) my largest individual cannabis long – based on the extremely favorable reward vs. risk ($1.08).
Positions: Long VRNO S
Upside, Downside Movers Before the Bell on Thursday Morning
Upside:
-INFQ +22% (signs $100M quantum computing LoI with US Commerce Department under CHIPS Act)
-GFS +15% (signs $375M quantum computing LoI with US Commerce Department under CHIPS Act)
-QBTS +15% (signs $100M quantum computing LoI with US Commerce Department under CHIPS Act)
-RL +9.6% (earnings, guidance)
-APLD +9.5% (leases 300 MW AI Factory campus)
-ELF +8.4% (earnings, guidance)
-AAP +7.9% (earnings, guidance)
-CRML +7.6% (executes definitive 15-year offtake agreement with REalloys Inc. for rare earth element concentrate from Critical Metals’ Tanbreez Project in Southern Greenland)
-IBM +6.2% (IBM and Commerce Dept confirm first Purpose-Built Quantum Foundry, supported by proposed $1B CHIPS Award)
-NIO +5.7% (earnings, guidance)
-RLAY +5.6% (prices 22.9M shares at $12.00/shr for gross proceeds ~$275M)
-USAR +3.6% (selected for DOE $19.3M funding for rare earth separations pilot)
Downside:
-DAVA -23% (earnings, guidance)
-INTU -15% (earnings, guidance; cutting workforce)
-RKLB -6.4% (files up to $3B common stock offering)
-STLA -5.8% (Investor Day commentary)
-KR -4.0% (reportedly new CEO plans steep price cuts to win back customers)
-AMST -3.5% (profit taking)
-NTES -3.3% (earnings, color)
-DE -3.1% (earnings, guidance)
-KD -2.8% (Susquehanna Cuts KD to Net Neutral from Net Positive, price target: $13)
-WMT -2.2% (earnings, guidance)
Positions: None.
ETF Action in the A.M.
Positions: None.
Charting the Premarket Percent Movers
Positions: None.
Treasury Auctions, Fed Speakers, Economic Calendar
Treasury Auctions
11:00 a.m.: Treasury announces a 3 and 6 month bill auction and a 13-Week Auction;
11:30 a.m.: Treasury hosts a $100B 4 and $95B 8 Week Bill Auction;
1:00 p.m.: Treasury hosts a $19B 10-Year TIPS Auction
Fed Speakers
11:20 a.m.: Federal Reserve Bank of Chicago President Austan Goolsbee (Non-Voter) Radio Appearance — WBEZ;
12:20 p.m.: Fed Bank of Richmond President Barkin (Non-Voter) speaks before the Urban Land Institute Triangle Capital Markets Lunch Event, Raleigh, NC (Audience and media Q&As expected)
Economic Calendar
Positions: None.
Tweet of the Day (Part Four)
Position: None
Tweet of the Day (Part Trois)
Position: None
The Gospel According to Johnny The Greek
I have followed my best pal JTG invest over the last two decades and I wanted to point out his instincts at inflection points — particularly on the long side — are remarkably good. (TLR ain’t bad either!)
Which brings me to cannabis (which I too have been adding to):
Johnthegreek
Well, I did the unthinkable. Just bought a sizable amount of MSOS. I feel it’s time.
pops4
Back the heavy hauler up! 🙂
TLR
Im in very large – im hearing things are moving
Johnthegreek
Me too.
TLR
An investment not a trade but now is the time
Dougie Kass
OMG
TLR
Schedule III Rescheduling Hearing Set for June 29
the DOJ and DEA announced an expedited administrative hearing beginning June 29, 2026 to consider the broader rescheduling of marijuana from Schedule I to Schedule III, with the intent to conclude no later than July 15. This is a hard deadline . U.S. Department of Justice
Moving to Schedule III allows medical cannabis operators to deduct ordinary and necessary business expenses — rent, payroll, marketing, and operating expenses — starting in tax year 2026. The order also directs the IRS to consider retroactive 280E relief for prior years. That’s a direct hit to the bottom line in a very good way
Johnthegreek
I’m not sure how I’ll handle this. Investment, trade, but I’m in pretty good and I’m committed to staying patient.
have a great night Tony.
TLR
You too pal!
Position: Long MSOS (M); Short MSOS calls (VS)